Business Information/Information about basic American business structure.

BUSINESS INFORMATION

                                                            INTRODUCTION

    American business today is exciting. The opportunities for success in the new millennium are virtually unlimited. Our economy rewards smart people who know how to get things done and most important of all--how to satisfy customers. Competition in business today is tough, challenging and good. The smart business person will consider competition as an opportunity for growth and achievement. You as a business person have a unique opportunity to prove yourself, your product and your company in today's economy.
     My goal is to help you and your business. The American economy is a very complex environment to operate in. Government regulations and red tape are something every business person must successfully manage in order to participate in the economy. No matter how your business is structured (as a corporation, a partnership or as a sole proprietorship), there are a host of laws and regulations you must comply with in order to conduct business. As your lawyer, I can help you successfully manage these issues.
     Before becoming a lawyer, I worked in the business world. I understand the challenges a business person faces today. I see issues and challenges the way you see them. I believe a lawyer must not only see issues from a legal point of view but from the client's viewpoint as well. I will work hard to protect you and your interest.

     WHAT TO CONSIDER WHEN STARTING A BUSINESS FOR PROFIT

     If you are thinking of starting a business for profit, you should know the major advantages and disadvantages of each form of business structure. There are three basic ways to conduct business for profit in the United States. They are as a corporation, a partnership or as a sole proprietorship.

A CORPORATION:

     The Advantages.

     There are many advantages of a corporation. Legally, a corporation is a separate entity. This means the law in the vast majority of instances will consider "corporate conduct" completely separate from you and your personal actions. For example, if a corporation that you own stock in borrows one million dollars, the corporation is liable for the debt. You are not personally liable for the debt. Unless you sign a personal guarantee, you cannot be held liable for the debt even if you own 100 percent of the stock in the corporation. Thus, a major advantage of conducting business as a corporation is limiting your exposure to financial loss to your investment in the corporation. Your personal assets like your home and personal property are protected.

     The Disadvantages.

     Conducting business as a corporation is expensive and complex. In many instances, corporations are subject to laws and regulations that do not apply to partnerships or a sole proprietorship. Thus, the administrative costs are high for a corporation. For smaller corporations, there are special problems. The owner of a small corporation may mix personal and business assets or not conduct business meetings as required by law. These violations could result in the owner of a small corporation losing the protection the corporate form of ownership has to offer. In other words, the owner could be held personally liable for corporation debts since the owner did not treat the corporation as a legally separate entity.

A PARTNERSHIP:

     The Advantages.

     The advantages of a partnership are the pooling of talent, assets and business know how. Two heads are better than one. The dynamics of having two or more people working together for a common goal can be very profitable. The chances for success in business increase as each member of the partnership servers the common interest. Also, partnerships are easier to manage and thus the administrative costs are lower.

     The Disadvantages.

     The disadvantages of a partnership are real. First, there is the legal exposure a member of the partnership has to the partnership generally. It is possible that you could be personally liable for the mistakes your partners make in business. Thus, your personal assets like your home could be in jeopardy for something your partner does. There are legal ways to protect you personally from the misdeeds of a partnership but they must be explored with care and diligence.

A SOLE PROPRIETORSHIP:

     The Advantages.

     The advantages of a sole proprietorship are significant. First, there is the satisfaction of working for yourself. There is no one to boss you around. Everything you do and achieve in business is yours and yours alone. You succeed or fail in business because of your own skills and abilities. Another major advantage of a sole proprietorship is the ease of entry into the economy. Just get a shingle for the front door and you're in business!! (Well, there may be a bit more to it than that, but you get the idea.)

     The Disadvantages.

     The disadvantages of a sole proprietorship are abundant. First, you are personally liable for any mistakes you make in business. Thus, your personal assets like your home are vulnerable. If you borrow a million dollars and you cannot pay it back, your creditors can collect from you by going after your personal assets. There are legal ways to limit your exposure but there are no guarantees. Regardless of the disadvantages of a sole proprietorship, a common mistake is to start a small business as a corporation. In most cases, it is better to start a small business as a sole proprietorship or a partnership and then as the business grows, form a corporation.    In other words, it is better to "grow" into the need to create a corporation first.

I hope you have enjoyed this brief discussion of basic American business structure. For more information contact:

David W. New, Esq.
6701 Democracy Blvd.
Suite 300
Bethesda, MD 20817
301-468-4905

Alexander
Hamilton
(1755-1804)

Alexander Hamilton was one of America's most important business leaders.
As the first Secretary of the Treasurer for the United States during George Washington's Administration, he had a leading role in shaping the American economy and the fiscal policy of the United States Government. It has been said that the "business of America is business." Alexander Hamilton made this possible more than any other founding father in American history.

Hamilton had other great achievements as well. He was one of three authors who wrote The Federalist Papers. Along with James Madison and John Jay, The Federalist Papers are the most authoritative commentaries on the U.S. Constitution.

Hamilton also had an important impact on a landmark Supreme Court decision, McCulloch v. Maryland, 17 U.S. 316 (1819). The Great Chief Justice John Marshall in 1819 borrowed heavily from Hamilton's opinion concerning the constitutionality of the Bank of the United States. A hot issue at the time.
Hamilton's arguments written in 1791 at the request of George Washington laid the foundation for the "implied powers" or the "resulting powers" doctrine for the Necessary and Proper Clause in Article I to the Constitution. Chief Justice Marshall agreed with Hamilton that the Bank of the United States was constitutional.

Hamilton enjoyed a close friendship with George Washington. They shared a kind of father and son relationship together during their lifetime.

Hamilton died in a famous duel with Aaron Burr. The two men were life long political enemies. Burr, who was then Thomas Jefferson's Vice President, delivered the fatal shot in a field of honor in New Jersey. Hamilton and Burr, both New Yorkers had to conduct the duel in New Jersey. Dueling was outlawed in New York. Burr had to leave the United States for a period of time because of the popular outrage at the death of Hamilton. Tragically, Hamilton's oldest son, Philip died in a duel in 1801.

The material posted on this website is for information purposes only and does not constitute legal advice. Further, the act of sending an email message does not create an attorney-client relationship.

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